United States Court of AppealsFor the Eighth Circuit

___________________________

No. 15-1932___________________________

Daniel Haney

lllllllllllllllllllll Plaintiff - Appellant

v.

Portfolio Recovery Associates, L.L.C.; Gamache & Myers, P.C.

lllllllllllllllllllll Defendants - Appellees____________

Appeal from United States District Court for the Eastern District of Missouri - St. Louis

____________

Submitted: January 14, 2016 Filed: September 21, 2016

[Published]____________

Before WOLLMAN, MELLOY, and COLLOTON, Circuit Judges.____________

PER CURIAM.

Daniel Haney asserted claims against a debt collector, Portfolio Recovery

Associates, L.L.C. (“PRA”), and its attorneys, Gamache & Myers, P.C. (“Gamache”),

under the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”).

The defendants moved for judgment on the pleadings pursuant to Fed. R. Civ. P.

12(c), and the district court granted the motion. We affirm in part, reverse in part, and

remand.

I.

Haney incurred credit-card debts using a Wal-Mart credit card issued by GE

Money Bank, F.S.B. (the “Wal-Mart account”), and an HSBC credit card issued by

HSBC Bank Nevada, N.A./Orchard Bank (the “HSBC account”). The card issuers

charged off the debts and later sold and assigned the charged-off debts to PRA. PRA

hired Gamache to aid in collection of the HSBC account. Gamache sent Haney three

collection letters and filed a state-court collection action. PRA employed other

counsel to aid in collection of the Wal-Mart account and filed a state-court collection

action.

Haney alleges FDCPA violations based upon statements, omissions, and

demands in the underlying letters and collection actions. The primary issues raised

in this appeal include: (1) whether the original creditors’ acts of charging off the

debts preclude the assignee debt collector from demanding post-charge-off statutory

prejudgment interest in letters and collection suits; and (2) whether the demands

sought prejudgment interest upon interest (compound interest) in violation of

Missouri law and the FDCPA.

With these arguments in mind, we turn to the detailed allegations. The balance

of the Wal-Mart account was $1,224.88 at the time of the July 20, 2010 charge-off.

Of that total amount, $416.93 was labeled “FINANCE CHARGES” and consisted,

at least in part, of accrued contractual interest. The HSBC account, purportedly

charged off on June 30, 2010, had a balance of $740.16. A June 2010 statement

shows the outstanding HSBC balance included at least some fee and interest charges.

PRA received the Wal-Mart account by assignment on April 19, 2011. Haney does

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not allege the date of assignment for the HSBC account, and the pleadings and

appended materials do not identify an assignment date. 1

Gamache sent Haney a first letter regarding the HSBC account dated April 11,

2013. The letter stated, “RE: PORTFOLIO RECOVERY ASSOCIATES, LLC

DANIEL G HANEY,” identified the debt as “OUR FILE NO.: 13504068,” and stated

the amount due was “$925.59 . . . plus interest that may accrue after the date of this

letter.” The letter stated Gamache would provide the name and address of the original

creditor if Haney requested the creditor’s identity within thirty days of receiving the

letter. The letter also stated Gamache would assume the debt to be valid unless

Haney responded within thirty days but would obtain verification of the debt if Haney

provided notice in writing to dispute any portion of the debt. The file number listed

in the letter bore no relationship to Haney’s HSBC account number. The letter made

no reference to HSBC or the $740.16 HSBC account balance at the time of charge-off

and provided no explanation as to how the demanded amount of $925.59 was

determined.

In fact, Haney argues the amount demanded approximated the $740.16 charge-

off balance plus nine percent statutory prejudgment interest from the June 20, 2010

charge-off to the date of the letter. The amount demanded was significantly below

an amount that would have resulted from the continued accrual of contractual interest.

The letter’s demand for interest covered a period of time before and after PRA

acquired the debt and sought statutory prejudgment interest on the entire charge-off

balance, an amount that included original principal, fees, and contractual interest.

Haney attached the collection letters, state-court complaints, and some1

additional materials to his federal complaint. We treat these materials as part of thepleadings. Stahl v. City of St. Louis, 687 F.3d 1038, 1039–40 (8th Cir. 2012). Theseattached materials, however, do not clarify exact dates for all events. Haneynevertheless treats certain facts as established for the purpose of his arguments onappeal.

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In the second letter, dated May 16, 2013, Gamache identified the debt with the

same account number, this time stating, “there appears to be an unpaid balance of

$931.98,” but Gamache’s client would settle for “745.58, provided this amount is

paid within 10 days from the date of this letter.” The third letter, dated May 31, 2013,

listed the same account number and stated, “CLAIM AMOUNT AS OF THE DATE

OF THIS LETTER IS: $934.72 PLUS INTEREST THAT MAY ACCRUE AFTER

THE DATE OF THIS LETTER.” Unlike the first two letters, which made no

references to remedies or legal actions, the third letter concluded, “If we do not hear

from you in five days, we will feel free to proceed with all available remedies without

further notice to you.”

Haney took no action in response to the letters and sought no clarification

regarding the identity of the original creditor. Gamache filed a Missouri state-court

complaint on November 7, 2013, naming PRA as the plaintiff, identifying Gamache

as counsel for PRA, and identifying HSBC as the original creditor. The complaint’s

prayer for relief, styled as a concluding “whereas” paragraph, sought “a sum of

$740.16 [the original charged-off amount] plus post judgment interest at the statutory

rate and for all costs expended herein and for any other and further relief this Court

deems just and proper.” The state-court complaint on the HSBC account included no

request for pre-judgment interest.

Regarding the Wal-Mart account, PRA sent no letters. Rather, PRA filed a

Missouri state-court complaint on April 22, 2013. The complaint’s prayer for relief,

styled as a concluding “whereas” paragraph, sought “a sum of $1,224.88 [the

charged-off amount], together with prejudgment interest, as allowed by law, at the

statutory rate from and after July 20, 2010, plus interest on any judgment rendered by

this court at the rate of 9% per annum, all costs expended herein and for such further

and other relief as this court deems just and proper.” This demand for statutory

prejudgment interest covered post-charge-off periods of time before and after PRA’s

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acquisition of the debt and also sought statutory prejudgment interest on the accrued

contractual interest reflected in the $1,224.88 charge-off balance.

Haney then filed the current complaint alleging FDCPA violations in four

counts. Count I alleged PRA violated 15 U.S.C. § 1692e in several respects by

“misrepresent[ing] the character or amount of the debt” being sought. First, Count

I alleged PRA’s suit on the Wal-Mart account misrepresented as principal a sum that

also included interest. Count I also alleged PRA misrepresented the amount it sought

by demanding prejudgment interest on a sum that already included contractual

interest. Regarding the HSBC account, Count I alleged PRA misrepresented the2

amount it sought by mischaracterizing as principal an amount that included interest.

Finally, Count I alleged PRA violated § 1692e by “alleging, without providing proof

of, a valid assignment from HSBC of the HSBC card debt[.]”

Count II alleged Gamache violated 15 U.S.C. § 1692e in two respects by

“misrepresent[ing] the character or amount of the debt” it sought. First, Count II

alleged Gamache’s letters failed to identify which debts were being pursued, “making

it impossible to ascertain which debt Gamache was attempting to collect, and making

it impossible to ascertain the validity of . . . the . . . debts[.]” Second, Count II

alleged Gamache’s letters “unlawfully attempt[ed] to collect interest-on-interest or

. . . interest inconsistent with the amount of the original charged-off debt regardless

of whether the letters were attempting to collect the HSBC . . . or the [Wal-Mart

account] . . . debt[.]”3

Haney also alleged, in Count I and in other Counts, that the defendants’2

demands for postjudgment interest were made in violation of the FDCPA. Thesearguments are wholly frivolous and we do not address them further.

Count IV restated the same allegations of Count II against Gamache,3

characterizing them as violations of § 1692f(1) rather than § 1692e. The district courtdismissed Count IV as derivative of Count II. Like the district court, we do notaddress Count IV separately.

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Count III alleged PRA violated 15 U.S.C. § 1692f(1) in two respects by

“us[ing] unfair or unconscionable means to attempt to collect the [HSBC] debt[.]”

First, Count III alleged PRA sought “interest, fees, and other amounts not permitted

at law or expressly permitted by the written instrument creating the debt.” Second,

Count III alleged PRA sought interest on interest “when such compound interest was

not expressly permitted by the written instrument.”

The defendants moved jointly for dismissal pursuant to Fed. R. Civ. P. 12(c).

Haney resisted, and the district court granted the motion. The court first determined

that the prayers for relief in the concluding paragraphs of a civil complaint were not

communications to the debtor or actionable collection efforts pursuant to the FDCPA.

Rather, the court characterized them as mere requests to the court. In the alternative,

the court held the original creditor’s act of charging off the card balance did not

preclude a subsequent assignee from seeking statutory interest dating from the time

of charge-off.

The court then determined PRA had referenced only the “balance due” or the

“outstanding sum” and had not made any actionable or potentially misleading

statements regarding the relative breakdown of principal and interest in the amounts

demanded. And, regarding the filing of the HSBC suit without proof of a valid

assignment, the district court determined there existed no requirement for the

presentation of such proof at the time a collection action is filed.4

Haney argues on appeal that he actually alleged PRA was not, in fact, the4

assignee of the HSBC account. In his complaint and district court briefing, however,he did not challenge HSBC’s status as assignee. Rather, he consistently argued thatPRA impermissibly filed suit “alleging, without providing proof of, a validassignment.” We view these issues as separate. The district court addressed the issuepresented and found no plausible FDCPA claim based on the failure to submit proofof assignment with a state court complaint. Because Haney did not challenge PRA’sstatus as assignee below, we do not address that issue on appeal. Because Haney

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The district court determined Gamache had not violated § 1692e by failing to

adequately identify the debt and Gamache and PRA had not impermissibly demanded

prejudgment interest-on-interest or compound interest, in violation of state law.

Haney appeals.

II.

A. Standard of Review, FDCPA Generally

“We review a motion for judgment on the pleadings de novo. We accept as

true all facts pleaded by the non-moving party and grant all reasonable inferences

from the pleadings in favor of the non-moving party.” United States v. Any & All

Radio Station Transmission Equip., 207 F.3d 458, 462 (8th Cir. 2000). “[W]e review

[a] 12(c) motion under the standard that governs 12(b)(6) motions.” Westcott v. City

of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). Pursuant to Rule 12(b)(6), “a

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to

relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial

plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Id. “A

pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements

of a cause of action will not do.’” Id. (quoting Twombly, 550 U.S. at 555). We

assess plausibility by “draw[ing] on [our own] judicial experience and common

sense.” Id. at 679. Further, we “review the plausibility of the plaintiff’s claim as a

whole, not the plausibility of each individual allegation.” Zoltek Corp. v. Structural

Polymer Grp., 592 F.3d 893, 896 n.4 (8th Cir. 2010).

does not otherwise challenge this aspect of the district court’s ruling, we do notaddress this issue further.

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“The FDCPA was passed ‘to eliminate abusive debt collection practices.’”

Janson v. Katharyn B. Davis, LLC, 806 F.3d 435, 437 (8th Cir. 2015) (quoting

Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577 (2010)).

It broadly “prohibits a debt collector from making a ‘false, deceptive or misleading

representation or means in connection with the collection of any debt,’” id. (quoting

15 U.S.C. § 1692e), and “from using ‘unfair or unconscionable means to collect or

attempt to collect any debt,’” id. (quoting 15 U.S.C. § 1692f). “When evaluating

whether a communication is false, deceptive, or misleading, we consider the

perspective of an ‘unsophisticated consumer.’” Id. (quoting Peters v. Gen. Serv.

Bureau, Inc., 277 F.3d 1051, 1055 (8th Cir. 2002)). This standard is “designed to

protect consumers of below average sophistication or intelligence without having the

standard tied to ‘the very last rung on the sophistication ladder.’” Strand v.

Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir. 2004) (quoting Duffy

v. Landberg, 215 F.3d 871, 874 (8th Cir. 2000)). “Th[e] standard protects the

uninformed or naive consumer, yet also contains an objective element of

reasonableness to protect debt collectors from liability for peculiar interpretations of

collection letters.” Id. at 317–18; see also Peters, 277 F.3d at 1055 (noting that the

unsophisticated-consumer test “‘prevents liability for bizarre or idiosyncratic

interpretations of collection notices’” (quoting Wilson v. Quadramed Corp., 225 F.3d

350, 354 (3d Cir. 2000))). We do not apply the unsophisticated-consumer standard

to communications sent to a consumer’s attorney. Powers v. Credit Management

Services, Inc., 775 F.3d 567, 573–74 (8th Cir. 2015).

In addition to these general prohibitions, the FDCPA sets forth several specific

examples of prohibited actions. For example, § 1692e(2) prohibits any “false

representation of . . . the character, amount, or legal status of any debt[.]” Section

1692e(5) prohibits threats “to take any action that cannot legally be taken or that is

not intended to be taken.” Section 1692f(1) prohibits the “collection of any amount

(including any interest, fee, charge, or expense incidental to the principal obligation)

unless such amount is expressly authorized by the agreement creating the debt or

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permitted by law.” And, § 1692g(a) imposes on debt collectors a duty to include

certain content in an initial communication with a debtor (or in a follow-up writing5

sent within five days). With these general requirements in mind, we turn to the

parties’ arguments.

B. Post-Charge-Off Statutory Prejudgment Interest

The parties agree that when an original creditor charges off a debt, additional

contractual interest no longer accrues. Haney asserts a theory of implicit waiver to

argue that the original creditor’s choice to charge-off a debt and cease collection of

contractual interest also serves as a binding waiver of any future ability to collect

statutory interest. To support this theory, Haney details the purported accounting

consequences of a charge-off and cites the legal effect of a charge-off on a creditor’s

The specific content includes:5

(1) the amount of the debt;(2) the name of the creditor to whom the debt is owed;(3) a statement that unless the consumer, within thirty days after

receipt of the notice, disputes the validity of the debt, or anyportion thereof, the debt will be assumed to be valid by the debtcollector;

(4) a statement that if the consumer notifies the debt collector inwriting within the thirty-day period that the debt, or any portionthereof, is disputed, the debt collector will obtain verification ofthe debt or a copy of a judgment against the consumer and a copyof such verification or judgment will be mailed to the consumerby the debt collector; and

(5) a statement that, upon the consumer's written request within thethirty-day period, the debt collector will provide the consumerwith the name and address of the original creditor, if differentfrom the current creditor.

15 U.S.C. § 1692g(a).

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ongoing obligation to provide periodic statements. See 12 C.F.R. § 226.5(b)(2)(i)

(“Regulation Z”). Haney appears to argue that, because the act of charging off a debt6

is not merely a unilateral act but an act that alters the parties’ relationship and

requires the original creditor to make representations to taxing authorities, we should

view a charge-off as a complete waiver of any right to all forms of interest.

The defendants argue the act of charging off a debt does not preclude the

collection of statutory prejudgment interest because the act of charging off a debt

does not eliminate either the original creditor’s statutory rights or the debtor’s

ongoing obligation to pay the charge-off balance—a liquidated sum—to the creditor.

The defendants acknowledge the unilateral act carries with it several legal

consequences as provided pursuant to federal tax law and Regulation Z. They argue,7

Regulation Z provides:6

Statement required. The creditor shall mail or deliver a periodicstatement as required by § 226.7 for each billing cycle at the end ofwhich an account has a debit or credit balance of more than $1 or onwhich a finance charge has been imposed. A periodic statement need notbe sent for an account if the creditor deems it uncollectible, ifdelinquency collection proceedings have been instituted, if the creditorhas charged off the account in accordance with loan-loss provisions andwill not charge any additional fees or interest on the account, or iffurnishing the statement would violate federal law.

12 C.F.R. § 226.5(b)(2)(i) (emphasis added)

See, e.g., McDonald v. Asset Acceptance LLC, No. 2:11–cv–13080, 2967

F.R.D. 513, 525 (E.D. Mich. Aug. 7, 2013) (“Instead of amassing interest on aworthless account, [the creditors] sought to sell the accounts and shift the risk ofnonpayment to a third party for a nominal fee. This practice also permitted [thecreditors] to remove the account from the financial records and receive a bad debt taxdeduction.” (citing I.R.C. § 166(a)(2))); see also 26 C.F.R. § 1.166–3(a)(2)(i) (“[T]heamount which has become worthless shall be allowed as a deduction under section

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however, that the unilateral act does not vest in the debtor a right to have the original

creditor and its assignees otherwise forbear from exercising statutory rights to

prejudgment interest.

Here, there is no suggestion the original creditors expressly waived any right

to statutory prejudgment interest. Similarly, there is no suggestion they asserted an

entitlement to statutory prejudgment interest. A failure to assert an entitlement to

such interest, however, is not in and of itself proof of waiver. Medicare Glaser Corp.

v. Guardian Photo, Inc., 936 F.2d 1016, 1021 (8th Cir. 1991) (applying Missouri law

and holding, “[f]orbearance . . . does not constitute a waiver”). Rather, pursuant to

Missouri law, implicit waivers must be “unequivocal[ly] clear.” Id. (“If a waiver is

implied from conduct, the conduct must be ‘so consistent with and indicative of an

intention to relinquish [the] particular right . . . and so clear and unequivocal that no

other reasonable explanation of [the] conduct is possible.’” (citation omitted)). In the

absence of some express statement or unequivocally clear overt act, we do not

presume waiver.

Although we have never addressed the effect of a debt charge-off upon the

availability of statutory prejudgment interest, several other courts have, including

several district courts applying Missouri law. Based on the analyses from these

several courts, we conclude Missouri statutory prejudgment interest remains available

following the charge-off of a credit-card debt.

Haney relies primarily upon a case involving Kentucky law in which the Sixth

Circuit held the act of charging off a debt precluded future accrual or collection of

statutory prejudgment interest as well as contractual interest. Stratton v. Portfolio

166(a)(2) but only to the extent charged off during the taxable year.”). Upon sale ofa completely charged-off account, the creditor’s basis likely will have been adjustedto zero, and the entire proceeds of the sale must recognized as income.

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Recovery Assocs., LLC, 770 F.3d 443, 445 (6th Cir. 2014) (“Under Kentucky law,

a party has no right to statutory interest if it has waived the right to collect contractual

interest. And any attempt to collect statutory interest when it is ‘not permitted by

law’ violates the FDCPA.”). In reaching its decision, the Sixth Circuit examined

Kentucky’s usury statute, which allows a default rate of interest of eight percent but

permits parties to contract for a different rate. Id. The court, deciding an issue of first

impression under Kentucky law, concluded that the statutory rate of interest falls

away entirely at the time the parties contract for a different rate. Id. at 447. As such,

if one of the contracting parties later waives its right to contractual interest, there

exists a void of authority to support an award of prejudgment interest rather than a

default statutory rate. Id. (“Kentucky’s usury statute states a default rule—it applies

until displaced by a contract . . . . A party’s right to collect statutory interest is

extinguished, superseded by her right to collect an interest rate she has specified by

contract.”).

In a detailed dissent, one judge rejected this reasoning, citing district court

cases from Missouri and Washington for the proposition that a default statutory rate

need not be viewed as falling away when parties contract for a higher rate. See id. at

453 (Batchelder, J., dissenting) (citing Peters v. Fin. Recovery Servs., Inc., 46

F. Supp. 3d 915, 917 (W.D. Mo. Sept. 18, 2014); Grochowski v. Daniel N. Gordon,

P.C., No. C13-343 TSZ, 2014 WL 1516586, at *3 n.2 (W.D. Wash. Apr. 17, 2014)).

The dissent advocated treating the default rate as a floor that remains in place as a

matter of statutory rights separate from contractual rights when parties contract for

a higher rate. Id. The dissent concluded in the alternative that, even if the majority’s

interpretation of Kentucky law were correct, any error at law by the debt collector in

this regard was reasonable and not actionable pursuant to the FDCPA. Id. at 453–54

(“To impose liability on [the debt collector] under the FDCPA for its reasonable

resolution of a state-law question that federal and state courts have not only yet to

resolve, but have never even addressed, extends the reach of the FDCPA too far.”).

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In the present case, the district court relied upon the lower court ruling from the

Eastern District of Kentucky that the Sixth Circuit reversed in Stratton. See Stratton

v. Portfolio Recovery Assoc., No.5:12-147-DCR, 2013 WL 6191804 (E.D. Ky. Nov.

26, 2013). Haney notes this fact to argue that the Sixth Circuit’s opinion in Stratton

undercuts the lower court ruling in the present case and requires that we reverse. We

disagree for several reasons.

First, the relevant Missouri statute at issue in the present case is materially

distinguishable from the Kentucky statute at issue in Stratton. Missouri’s statute

provides:

Creditors shall be allowed to receive interest at the rate of nine percentper annum, when no other rate is agreed upon, for all moneys after theybecome due and payable, on written contracts, and on accounts afterthey become due and demand of payment is made; for money recoveredfor the use of another, and retained without the owner's knowledge ofthe receipt, and for all other money due or to become due for theforbearance of payment whereof an express promise to pay interest hasbeen made.

Mo. Rev. Stat. § 408.020. The Missouri statute merely states the statutory rate of

nine percent is available “when no other rate is agreed upon.” Id. It does not state

the nine percent rate otherwise becomes unavailable if a party contracts for a higher

rate but subsequently waives that higher rate. Although it may be reasonable to

conclude such interest falls away and becomes unavailable if parties contract for a

higher rate, such a reading is by no means compelled.

In contrast, the relevant Kentucky statute examined in Stratton, 770 F.3d at

447, speaks in strict terms regarding the unavailability of statutory interest when

parties contract for a higher rate:

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The legal rate of interest is eight percent (8%) per annum, but any partyor parties may agree, in writing, for the payment of interest in excess ofthat rate[;] . . . and any such party or parties, and any party or partieswho may assume or guarantee any such contract or obligation, shall bebound for such rate of interest as is expressed in any such contract,obligation, assumption, or guaranty, and no law of this state prescribingor limiting interest rates shall apply to any such agreement or to anycharges which pertain thereto or in connection therewith. . . .

Stratton, 770 F.3d at 447 (quoting Ky. Rev. Stat. § 360.010(1)) (alterations in

original) (emphasis added). In fact, the majority in Stratton noted this distinction in

a footnote addressing the dissent’s reliance on cases interpreting Missouri and

Washington law. Id. at 448 n.1 (“As a result, courts construing such statutes may

determine that the particular state regime does not treat creditors so strictly after they

waive a contractual rate of interest. Such differences among statutes reinforce the

need to read Kentucky's statute carefully and apply its particular language.” (citing

Peters v. Northland Grp., No. 14–0488–CV, 2014 WL 4854658 (W.D. Mo. Sept. 30,

2014); Grochowski v. Daniel N. Gordon, P.C., No. C13–343, 2014 WL 1516586

(W.D. Wash. Apr. 17, 2014))); see also Bunce v. Portfolio Recovery Assoc., LLC,

No. 14-2149, 2014 WL 5849252, at *4 (D. Kan. Nov. 12, 2014) (“The Sixth Circuit's

decision in Stratton turned on a unique feature of the Kentucky interest statute[.]”).

We find the absence of such language in the Missouri statute a compelling reason to

depart from the majority’s holding in Stratton.

Second, when we examine the federal statutory rights or privileges gained or

lost due to charging off a debt, supra n. 6–7, we find nothing inconsistent with the

creditor or its assignee seeking statutory prejudgment interest after the amount owed

is reduced to a liquidated sum through charge-off. The tax benefit of a debt charge-

off—current realization of expense deduction or capital loss—is a matter of concern

as between the creditor and the relevant taxing authority. Haney appears to assert that

any attempt to collect statutory interest is inconsistent with the accounting treatment

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of a debt at charge-off. Even if Haney is correct that seeking statutory interest would

be contrary to prior tax treatment, the consequences of such an act are a matter of

concern as between the creditor and the taxing authority rather than between the

creditor and the debtor. A creditor’s potential liability for penalties or additional

taxes does nothing to change the liquidated sum the debtor owes the creditor at the

time of charge-off, and it is highly unlikely a debtor would know of any

communications between a creditor and a taxing authority or any ongoing changes

or adjustments to a creditor’s treatment of a reported item. See, e.g., AmBase Corp.

v. United States, 731 F.3d 109, 121–22 (2d Cir. 2013) (holding taxpayer was allowed

to retroactively increase a claimed bad-debt deduction in amount necessary to account

for a charge-off). As such, it is difficult to appreciate how arguable inconsistencies

between collection efforts and tax treatment might aid Haney’s waiver argument.

Haney also emphasizes that the act of charging off a debt and sending a charge-

off statement relieves the creditor of the obligation to send periodic statements

complying with the disclosure requirements of the Truth in Lending Act (“TILA”)

and Regulation Z. TILA and its regulations, however, are concerned with adequately

communicating contractual terms addressing interest and finance charges on

consumer loans; they are not designed for the general communication of state law to

consumers or to govern the state-law treatment of general claims for liquidated sums.

See, e.g., Peters, No. 14-0488-CV, 2014 WL 4854658, at *2 (W.D. Mo. Sept. 30,

2014) (“The . . . context of [Regulation Z, 12 C.F.R. § 226.5(b)(2)(I),] and the

enabling statutes suggest otherwise, as they regulate disclosure of interest and finance

charges imposed by the consumer’s loan agreement; the regulation is not targeted

toward disclosure of the fixed rate of interest states routinely impose on debts prior

to judgment.”). Nothing inherent in the process of charging off a debt precludes a

claim for statutory interest, and Missouri’s prejudgment interest statute does not

expressly preclude statutory prejudgment interest following a waiver of contractual

interest. PRA and Gamache’s demands for such interest, therefore, were not

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actionable misrepresentations or unfair or unconscionable collection methods under

15 U.S.C. § 1692e or § 1692f, respectively.

Although we hold statutory prejudgment interest remains available as a general

matter, Haney raises separate, additional challenges. First, he notes that Gamache’s

letters on the HSBC account and PRA’s complaint on the Wal-Mart account sought

prejudgment interest for periods of time prior to PRA’s purported acquisitions of the

debts. He appears to argue that, even if statutory interest might otherwise be

available to PRA, it is not available for the period of time following charge-off and

preceding assignment. Second, he argues Missouri Revised Statutes § 408.020

requires a demand to trigger the accrual of statutory prejudgment interest. According

to Haney, Gamache and PRA made no demand for prejudgment interest on the HSBC

account prior to Gamache’s April 11, 2013 letter, and PRA made no demand on the

Wal-Mart account prior to filing the state court complaint. Thus, Haney argues, the

attempt to collect prejudgment interest for periods of time prior to these

communications supports his FDCPA claims.

The defendants argue these issues were not raised below and cannot be raised

on appeal. We need not rely on defendant’s waiver argument, because we find

Haney’s position as to the timing issue or a demand requirement is without merit. 8

Regarding the timing of assignments, PRA obtained the same rights as held by the

original creditors. See Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d

112, 128 (Mo. 2010) (en banc) (“The only rights or interests an assignee acquires are

those the assignor had at the time the assignment was made. Because an assignee

merely steps into the shoes of the assignor, an assignee must allege facts showing that

the assignor would be entitled to relief.” (citation omitted)); Cordry v. Vanderbilt

At page ten of the resistance to the defendants’ motion for judgment on the8

pleadings, Haney asserted, “[PRA], therefore, at the very least was attempting tocollect interest from a point in time prior to its acquisition of the debt.” It does notappear Haney raised below the issue of a section 408.020 demand requirement.

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Mortg. & Fin., Inc., 445 F.3d 1106, 1111 (8th Cir. 2006) (Missouri assignee “steps

into the shoes”). Because we hold the original creditors’ acts of charging off the

debts did not effectuate waivers of statutory interest, the assignments of the debt to

PRA did not “create” the entitlement to statutory prejudgment interest. The

assignments merely transferred any entitlement to such interest that otherwise existed.

See Renaissance Leasing, LLC, 322 S.W.3d at 128.

Regarding the necessity of a demand, Haney cites no authority for the

propositions that (1) any required “triggering” demand itself must reference

prejudgment interest; or (2) an assignee must itself make a demand separate from an

earlier demand issued to the debtor by the original creditor/assignor. A review of

Missouri law suggest that where a demand is required, the availability of statutory

prejudgment interest depends upon a demand for the amount owed, not a demand

specifically for statutory interest. Ogg v. Mediacom LLC, 382 S.W.3d 108, 119 (Mo.

Ct. App. 2012) (“The demand need not be in any certain form . . . [and] need not

make a specific request for prejudgment interest.” (quoting Rois v. H.C. Sharp Co.,

203 S.W.3d 761, 767 (Mo. Ct. App. 2006))); see also Phoenix Assurance Co. of N.Y.

v. Appleton City, 296 F.2d 787, 796 (8th Cir. 1961) (“It appears to us that Section

408.020 makes no requirement that a specific demand be made for interest and that

a demand for payment upon an account is sufficient to start the running of interest

thereon.”); McDonald v. Loewen, 130 S.W. 52 (Mo. Ct. App. 1910) (“In the absence

of special agreement as to interest or as to the time of payment, the interest is payable

on a debt from the time the principal is demanded.”). Further, it is undisputed that

Haney received monthly periodic statements from the original creditors prior to

charge-off, and at least as to the Wal-Mart account, the charge-off statement itself is

attached to the pleadings. Haney received a demand for payment of his accounts

when due. We conclude any demand requirement that exists as a precondition to the

accrual of statutory prejudgment interest was satisfied by the original creditors’

demands upon Haney.

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C. Interest-on-Interest

In appealing the dismissal of Count II and Count IV, Haney alleges that

Gamache’s attempt to collect statutory prejudgment interest on the interest portion of

the charge-off balances violates Missouri restrictions on the collection of compound

interest. He thus contends that Gamache falsely represented the amount of a debt, in

violation of § 1692(e)(2)(A), and unfairly attempted to collect an amount that was not

permitted by law, in violation of § 1692f(1). In this regard, we conclude that Haney

has stated a claim that should have survived a motion for judgment on the pleadings.

Missouri Revised Statutes Section 408.080 permits parties to “contract, in

writing, for the payment of interest upon interest[.]” See also Lammers v. Lammers,

884 S.W.2d 389, 393 (Mo. Ct. App. 1994) (“Compound interest is interest upon

interest; where accrued interest is added to the principal sum and the whole treated

as a new principal for the calculation of interest for the next period.” (citation

omitted)). But, as just discussed, the interest at issue is statutory, not contractual.

Gamache cites no statutory provisions permitting a creditor or its assignee to collect

compound interest by assessing statutory prejudgment interest on the portion of a

liquidated sum comprising already accrued contractual interest.

Gamache relies on Boatmen’s First National Bank of Kansas City v. Bogina

Petroleum Engineers, 794 S.W.2d 703 (Mo. Ct. App. 1990), for the proposition that

statutory interest may accrue on a liquidated sum that includes initial, contract-based

interest. Boatmen’s, however, dealt exclusively with the availability of postjudgment

interest on a judgment stemming from an underlying obligation that included both

principal and interest. 794 S.W.2d at 706 (“This court . . . holds that the judgment

bears interest even though it contains an amount designated as interest.”). In

Boatmen’s, the court expressly distinguished postjudgment interest from prejudgment

interest, describing prejudgment interest as part of the underlying compensatory

award and postjudgment interest as a statutory creation to compensate the judgment

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creditor for any delay in the immediate payment of the liquidated judgment amount.

Id. at 705 (“[P]rejudgment interest is awarded on the theory that it is necessary in

order to give full compensation for the loss sustained. On the other hand

post-judgment interest, or interest on the judgment, is awarded on the theory that it

is a penalty for delayed payment of the judgment.”). The court proceeded to

emphasize that the Missouri statute authorizing compound interest, Missouri Revised

Statutes Section 408.080, “is designed as a regulation of interest on contracts and

does not purport to apply to interest on judgments.” Id. at 706. The court also noted

that the postjudgment interest statute, section 408.040, “does not contain any

prohibition against a judgment bearing interest which is made up partly of

prejudgment interest.” Id. Simply put, Boatmen’s relied strongly on what it9

characterized the unique nature of postjudgment interest to reach its holding. The

absence of statutory authority for non-contractual prejudgment compound interest,

coupled with Boatmen’s clear and emphatic discussion distinguishing between

postjudgment and prejudgment interest, persuades us that Missouri statutory

prejudgment interest cannot be assessed on already accrued interest.

Missouri’s postjudgment interest statute, as in place at the time of the letters9

and collection actions in this case, was materially the same as the statute at issuereferenced in Boatmen’s. It provided simply, “In all nontort actions, interest shall beallowed on all money due upon any judgment or order of any court from the datejudgment is entered by the trial court.” Mo. Rev. Stat § 408.040.1 (2013) (emphasisadded). The statute did not parse judgments based upon the underlying sources andnatures of sums that ultimately become reflected in a judgment. Missouri has sinceamended section 408.040 to expressly clarify that postjudgment interest applies to allsources of prejudgment amounts. See Mo. Rev. Stat. § 408.040.1 (2015) (“Judgmentsshall accrue interest on the judgment balance as set forth in this section. The‘judgment balance’ is defined as the total amount of the judgment awarded on the dayjudgment is entered including, but not limited to, principal, prejudgment interest, andall costs and fees.”).

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The question remains whether Haney has stated a plausible FDCPA claim

through his allegation of an attempt to collect an interest-on-interest amount not

allowed as a matter of state law. As a general matter, state collection law and the10

FDCPA are not coextensive—sections 1692e and 1692f are not federal enforcement

mechanisms intended to reach every violation of state collection law. See Carlson v.

First Revenue Assurance, 359 F.3d 1015, 1018 (8th Cir. 2004) (“The FDCPA was

designed to provide basic, overarching rules for debt collection activities; it was not

meant to convert every violation of a state debt collection law into a federal

violation.”). In Carlson, for example, we held that violation of a state law regarding

collection agencies’ maintenance of licenses at all physical locations did not also

comprise a violation of the FDCPA. We stated, “even if [the debt collector] was

violating Minnesota law . . . that violation would not constitute a false or misleading

representation.” Id.; see also Gallego v. Northland Grp., Inc., 814 F.3d 123, 127 (2d

Cir. 2016) (noting that every circuit to address the issue has held the FDCPA does not

make “violations of state and local debt collection statutes . . . per se actionable under

the FDCPA.”). In Gallego, the Second Circuit noted the FDCPA’s express

preemption language reached only state laws inconsistent with the FDCPA, thus

establishing conclusively that “state laws [may] offer protections to consumers that

go beyond the FDCPA itself.” Gallego, 814 F.3d at 127.

We note that Haney cites Wilhelm v. Credico, Inc., 519 F.3d 416, 420–21 (8th10

Cir. 2008), to argue that the Eighth Circuit has already held, specifically, that animpermissible attempt to collect statutory prejudgment interest on sums that includecontractual interest amounts to an FDCPA violation. In Wilhelm, however, we madeno such holding. Rather, we addressed the potential application of the § 1692k(c)bona fide error defense, and merely noted that “for purposes of this appeal” theviability of such a claim was undisputed. Wilhelm, 519 F.3d at 420 (“For purposesof this appeal, it is undisputed that the amount demanded in [the] letter . . . includeda demand for payment of interest on past-due interest; that this portion of the asserteddebt violated N.D.C.C. § 47-14-09(1); and that threatening to sue to collect a debtcomputed in violation of state law is prohibited by 15 U.S.C. § 1692e(5).”).

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A thorough examination of the dividing line between state law violations that

are and are not actionable pursuant to the FDCPA is beyond the scope of this case and

far beyond the issues briefed by the parties. Looking only at a violation like PRA and

Gamache’s impermissible demand for compound interest, our opinion in Duffy, 215

F.3d at 874, coupled with the unsophisticated-consumer standard, show Haney has

articulated actionable claims.

In Duffy, we addressed several different alleged FDCPA violations stemming

from three demand letters related to dishonored checks. 215 F.3d at 874–75. We

held demands for unauthorized fees, penalties, or even “slightly overstated” interest

may give rise to claims for violations of § 1692e, § 1692e(5), or § 1692f(1). Id. In

particular, we held a debt collector’s demand for a “civil penalty in the amount of

$100” violated § 1692(e) as a misleading representation of state law because the

relevant state law only permitted a “penalty of up to $100 or up to 100 percent of the

value of the [dishonored] check, whichever is greater” and only if the debt collector

actually pursued the matter “to hearing by the court.” Id. at 874. We also held the

debt collector violated § 1692e(5)’s prohibition on threatening to take “action that

cannot legally be taken” when threatening to seek attorneys fees if required to pursue

the matter to court. Id. And finally, we held the three letters’ “interest calculations”

which “were only slightly overstated” comprised an attempt to collect interest not

permitted by law in violation of § 1692f(1) even though the interest amounts were

only misstated by $1.29, $1.84, and $0.65, respectively.

Looking at these holdings, our opinion reasonably can be interpreted as

establishing two rules: (1) there exists no de minimis exception to FDCPA liability

based upon low dollar amounts; and (2) debt collectors’ false representations about

the availability of remedies or amounts owed under state law, like representations of

fact, are to be viewed through the unsophisticated-consumer standard and may be

actionable pursuant to the FDCPA. Applying these holdings to the present case,

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Haney has articulated viable § 1692e and § 1692f(1) claims by alleging false

statements and collection attempts regarding the availability of compound interest.

D. PRA’s Prayers for Relief in Litigation

Haney also appeals the district court’s dismissal of claims against PRA arising

from PRA’s assertion in prayers for relief in litigation of a right to recover statutory

prejudgment interest on accrued contractual interest. In its petition filed against

Haney in Missouri circuit court, PRA included two prayers for relief asking the court

to enter judgment in a sum certain, “together with prejudgment interest, as allowed

by law, at the statutory rate from and after July 20, 2010, plus interest on any

judgment . . . at the rate of 9% per annum.” The district court thought it “doubtful”

that a request for relief in the “wherefore” clauses of PRA’s petition could violate the

FDCPA, but ultimately concluded that PRA was entitled to the interest claimed.

Haney argues that because collection of interest on interest was not permitted by

Missouri law, PRA’s petition included a false representation and constituted an unfair

or unconscionable means to collect a debt, in violation of §§ 1692e and 1692f(1).

Although we have concluded that PRA cannot collect the disputed interest on

interest under Missouri law, the claim for that amount in the petition was a statement

directed to the court, and it was a good faith legal position on a point of unsettled

Missouri law. Indeed, the district court agreed with PRA’s legal position. We reject

Haney’s contention that the “wherefore” clauses were false representations or an

unfair or unconscionable means to collect a debt within the meaning of the FDCPA.

As several courts have recognized, the statute does not forbid a party from stating its

good faith legal position to a court in a prayer for relief. Riermersma v. Messerli &

Kramer, P.A., No. 07-3898, 2008 WL 2390729, at *2 (D. Minn. June 9, 2008) (“A

prayer for relief is ‘[a] request addressed to the court and appearing at the end of a

pleading.’ Black’s Law Dictionary 1213 (8th ed. 2004). As such, a request . . .

within the prayer for relief is not directed at the debtor. Rather, it is part of the

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ultimate satisfaction sought by a plaintiff and asked of the court.”); Winn v. Unifund

CCR Partners, No. 06-447, 2007 WL 974099, at *3 (D. Ariz. Mar. 30, 2007) (“Even

the ‘least sophisticated debtor’ would understand that this amount . . . is what his

creditor would like the court to conclude is reasonable. He might have to pay it; he

might not. The prayer for relief is not false, deceptive, misleading or unfair.”);

Argentieri v. Fisher Landscapes, Inc., 15 F. Supp. 2d 55, 61 (D. Mass. 1998) (“A

prayer for relief in a complaint, even where it specifies the quantity of attorney's fees,

is just that: a request to a third party—the court—for consideration, not a demand to

the debtor himself. ”).

This court in Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814 (8th Cir.

2012), declined to rule categorically that statements to a court are never actionable

under § 1692e, but did not suggest that a good faith prayer for relief was the sort of

“abusive, deceptive, or unfair means of debt collection” that might support a claim.

Id. at 818. Rather, we signaled a willingness to consider “a § 1692e complaint

alleging that the defendant debt collector lawyer routinely files collection complaints

containing intentionally false assertions of the amount owed, serves the complaints

on unrepresented consumers, and then dismisses any complaint that is defaulted.” Id.

PRA’s prayer for relief is a far cry from the unfair and abusive scenario contemplated

in Hemmingsen. The district court correctly dismissed Count I and Count III against

PRA.

E. Lack of Clarity in Gamache’s Collection Letters

Haney argues that Gamache’s failure to identify HSBC, cite the $740.16

account balance, or explain the various sums demanded in the three letters resulted

in a failure to comply with § 1692g(a)(1) and were, in collective effect, misleading

to an unsophisticated consumer in violation of § 1692e. Haney did not assert a claim

based on § 1692g(a) below. We nevertheless find § 1692g(a) material to our analysis

because it sets forth what a debt collector must disclose in an initial communication

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(or in a timely follow-up notice). See supra n. 5. Here, Gamache provided the

required information and, aside from including an impermissible claim for interest-

on-interest in the amount demanded, Gamache did not relay any inaccurate

information. Gamache complied with the requirements to truthfully identify itself and

the party it represented, to whom the debt was owed. Gamache also complied with

the requirement to notify Haney of the option to challenge the validity of the debt and

to offer to identify the original creditor. While Gamache could have disclosed more

information in its initial communication, it was not required to do so.

Further, § 1692g(a)(5) specifically anticipates that an initial communication

may omit the identity of the original debtor. As such, Gamache’s failure to reference

HSBC in the April 11, 2013 letter cannot serve as a basis for this claim. Examining

Haney’s claim, all he has alleged is that the amount demanded was confusing or

misleading when coupled with the failure to identify HSBC. As such, and given our

conclusion that Haney may proceed with his interest-on-interest claim against

Gamache, there is no separate ground on which to reverse the district court’s

dismissal of this claim.11

Haney argues on appeal that Gamache and PRA violated 15 U.S.C.11

§ 1692e(5) by threatening “to take [an] action that cannot legally be taken or that isnot intended to be taken.” Haney specifically argues on appeal that Gamache’srequest for post-charge-off interest in the three letters on the HSBC account, followedby an absence of any such demand in the subsequent collection action, showsGamache made threats without the requisite intent to take the threatened action.

Haney, however, raised no “intent”-based § 1692e(5) claim in his complaintnor in his district court resistance to the motion to dismiss, and we generally do notaddress new claims on appeal. That having been said, to the extent his new§ 1692e(5) argument rests on the assertion that Gamache and PRA threatened actionthat could not legally be taken, we note that the mere omission of a claim forprejudgment interest in the state-court complaint on the HSBC account does notestablish the absence of a then-present intent to pursue such relief at the timeGamache sent the collection letters.

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III.

We reverse the judgment of the district court dismissing Haney’s claims against

Gamache in Count II and Count IV based on the attempted collection of statutory

prejudgment interest on accrued contractual interest. We affirm the judgment of the

district court in all other respects and remand for further proceedings consistent with

this opinion.

MELLOY, Circuit Judge, Concurring in Part and Dissenting in Part.

I concur in the opinion other than part II.D. I would hold the demand for

interest upon interest in PRA’s complaint served as a false representation and

constituted an unfair or unconscionable means to collect a debt, in violation of

§§ 1692e and 1692f(1). Accordingly, I would reverse the dismissal of this claim

against PRA.

PRA argues on appeal that use of the language “as allowed by law” shows it

sought interest in the complaint addressing the Wal-Mart account only to the extent

permitted by applicable law. PRA also argues placement of its demand in the prayer

for relief makes the demand an aspirational request to the court rather than a potential

misrepresentation to the debtor. As support for these conclusions, PRA cites several

district court cases arguably consistent with its position. In reality, these arguments

are specific examples of broader arguments our court has wrestled with in the past

regarding the applicability of the FDCPA to various litigation-related activities and

communications. See, e.g., Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814,

818 (2012) (“[The Supreme Court in] Heintz[ v. Jenkins, 514 U.S. 291, 299 (1995)]

answered the question whether the FDCPA applies to a lawyer who regularly collects

consumer debts through litigation. But the circuit courts have struggled to define the

extent to which a debt collection lawyer’s representations to the consumer’s attorney

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or in court filings during the course of debt collection litigation can violate

§§ 1692d–f.”).

In Hemmingsen, we rejected any sort of categorical approach that might deem

“false statements not made directly to the consumer debtor” immune from FDCPA

scrutiny. Id. at 818. Rather, we adopted “a case-by-case approach,” id. at 819, noting

representations to attorneys or in pleadings arise “in a wide variety of situations,” id.

at 818, that “routinely come to the consumer’s attention and may affect his or her

defense of a collection claim,” id. We ultimately held in Hemmingsen that the

representations at issue, made in a summary judgment memorandum and affidavit, did

not violate the FDCPA because they were made long after litigation commenced and

were not representations likely to deter the debtor from mounting a “vigorous

defense.” Id. at 819. We also noted the FDCPA was not intended to destroy

creditors’ access to judicial remedies, and as such, creditors should be allowed to

advance their arguments and attempt to present evidence without fearing FDCPA

liability merely because a state court ultimately rejects a statement as unsupported in

a summary judgment proceeding. Id.

As per Hemmingsen, we must assess how the hypothetical unsophisticated

consumer will perceive the representations in a letter or complaint. I conclude the

placement and wording at issue in the present case are not shielded from further

scrutiny pursuant to the FDCPA. When receiving a demand letter, a debtor faces

many choices: take no action, seek clarification, pay the amount demanded (or some

other amount), seek relief or renegotiation, or hire counsel. Similarly, when receiving

a civil complaint in a collection action, the debtor may take no action and accept a

default judgment, mount defenses with varying degrees of vigor, proceed pro se, or

proceed with counsel. The demands and allegations in the letters and complaints do

not exist in a vacuum. They may well arrive in the hands of a debtor and affect a

debtor’s choice of action—deterring the debtor from mounting a defense or

employing counsel. See Hemmingsen, 674 F.3d at 818 (“Though rarely made

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‘directly’ to the consumer debtor, such representations routinely come to the

consumer's attention and may affect his or her defense of a collection claim.”).

Further, such representations made to a consumer prior to the consumer’s retention

of counsel on the matter clearly are subject to the unsophisticated-consumer standard.

See Powers, 776 F.3d at 573–74.

Viewed in this light, understood as a statement to the consumer as well as to

the court, and reasonably interpreted in favor of the plaintiff, PRA’s use of the phrase

“as allowed by law,” within the context of the larger phrase “as allowed by law, at the

statutory rate from and after July 20, 2010,” should not be limited to the narrow and

defendant-friendly construction meaning “if allowed by law.” At the motion to

dismiss stage, I am reluctant to presume the phrasing represents a good faith assertion

of a legal theory only to the court. An unsophisticated consumer, without adopting

an idiosyncratic or bizarre interpretation, easily could view the phrase “as allowed by

law” as an affirmative representation that the relief or amount sought is, in fact,

allowed. See Duffy, 215 F.3d at 874–75 (holding representations about the

availability of remedies under state law can be actionable pursuant to the FDCPA).

Simply put, PRA did not make an open-ended demand (language seeking “such

additional relief as the court may allow”) or clearly articulate hedging language

(language such as “if allowed by law” or “to the extent a court may find it to be

allowed by law”) sufficient to pass muster under the unsophisticated-consumer

standard. See, e.g., Stratton, 770 F.3d at 451 (rejecting the argument that a demand

in a complaint was merely a good faith argument to the court and concluding, “Saying

[the debtor] owed $2630.95 plus whatever interest the court chooses to award is

simply not the same as saying that [the debtor] owed $2630.95 plus 8% interest from

the date [the original creditor] charged off her account.”).

Similarly, the placement of a demand in a civil complaint’s prayer for relief,

styled as a concluding “whereas” clause, does not necessarily take the demand outside

the scope of the FDCPA’s protections. In so holding, I would reject the conclusion

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of the majority and the several courts cited above indicating that such a clause is a

non-actionable request to the court rather than an actionable debt-collection activity.

Rather, as per the instruction of Hemmingsen: we may not presume a statement

categorically non-actionable pursuant to the FDCPA merely because it is a statement

to a third party. Hemmingsen, 674 F.3d at 818. Here the prayed-for relief stated “as

allowed by law” in connection with a statutory rate of interest from a certain date.

The prayer for relief was served upon the debtor and was not a vague demand for

whatever the court might deem appropriate and consistent with applicable law. We

therefore should not cut off Haney’s claim at this early stage.

______________________________

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